The owners of a roofing business could face up to five years in prison if they’re found guilty of charges of workers’ comp insurance fraud.
John and Camille Applegate, the owners of Hallmark Roofing in Belmont, CA, have been arrested on 24 felony counts of workers’ comp insurance premium fraud and five felony counts of failure to report employee wages. If convicted, both could face prison time and restitution, which could exceed $1 million.
The California Department of Insurance investigated the Applegates’ business. State officials say Hallmark failed to report its employee wages to its workers’ comp insurance carrier, the State Compensation Insurance Fund.
Investigators calculated that by failing to report the business’ wages accurately, Hallmark avoided paying over $629,000 in workers’ comp insurance premiums from 2007 through 2011.
The Department of Insurance says the investigation also revealed that the business evaded paying payroll taxes. The owners allegedly deducted the payroll taxes from their employees’ wages but failed to pay the taxes to the state.
The Insurance Commissioner’s office says underpaying insurance premiums and taxes gave the business an unfair advantage, allowing Hallmark to operate in the underground economy when bidding for projects.
California Insurance Commissioner Dave Jones said this case is part of “ongoing efforts to bring fairness to the bidding process.” Jones said, “Business owners who operate unfairly in the underground economy will be brought to justice.”